Microeconomic Theory Exam Questions
Course Introduction
Microeconomic Theory delves into the fundamental principles that govern the behavior of individuals and firms in making choices regarding the allocation of limited resources. Students will explore topics such as consumer and producer theory, market equilibrium, elasticity, and the effects of government intervention. The course emphasizes rigorous analytical tools including optimization and comparative statics while introducing the foundational concepts of game theory, uncertainty, and asymmetric information. Through theoretical modeling and real-world applications, students will develop a deep understanding of how microeconomic forces shape markets and inform economic decision-making.
Recommended Textbook
Microeconomics Today The Macro View 17th Edition by Roger LeRoy Miller
Available Study Resources on Quizplus
21 Chapters
7508 Verified Questions
7508 Flashcards
Source URL: https://quizplus.com/study-set/3950 Page 2
Chapter 1: The Nature of Economics
Available Study Resources on Quizplus for this Chatper
347 Verified Questions
347 Flashcards
Source URL: https://quizplus.com/quiz/78814
Sample Questions
Q1) Ceteris paribus means
A)other variables are held constant.
B)almost certainly.
C)only if everything works just right.
D)perhaps.
Answer: A
Q2) In order to study how changing price affects consumer decisions,we must assume all other factors,such as income and the prices of other goods are constant.This assumption is best know as
A)rationality.
B)ceteris paribus.
C)normative economics.
D)behavioral economics.
Answer: B
Q3) Ceteris paribus means
A)"all variables are independent."
B)"other things being equal."
C)"some assumptions must be accepted without proof."
D)"some theories are not rational."
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Scarcity and the World of Trade-Offs
Available Study Resources on Quizplus for this Chatper
411 Verified Questions
411 Flashcards
Source URL: https://quizplus.com/quiz/78812
Sample Questions
Q1) Comparative advantage is
A)when a country can produce a good at a lower opportunity cost compared to other countries.
B)when a country can produce all goods more quickly than any other country.
C)when the production possibilities curve shifts outward to the right.
D)only for individuals and not countries.
Answer: A
Q2) Explain what will happen to the production possibilities curve over time if society gives up some consumption goods in favor of more capital goods.
Answer: If society chooses to give up some consumption goods in favor of more capital goods,then the production possibilities curve will shift outward over time.This happens when the capital goods can be used to produce more goods in the future.
Q3) All of the following are economic resources,or factors of production EXCEPT A)land.
B)physical capital.
C)money.
D)entrepreneurship.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Demand and Supply
Available Study Resources on Quizplus for this Chatper
448 Verified Questions
448 Flashcards
Source URL: https://quizplus.com/quiz/78801
Sample Questions
Q1) The money price of a good is also known as its
A)relative price.
B)case price.
C)absolute price.
D)subjective price.
Answer: C
Q2) When the price of a good falls,there will be
A)an outward shift in the good's demand curve.
B)both an outward shift in the good's demand curve and a movement along the good's demand curve.
C)a movement along the good's demand curve.
D)no change in quantity demanded.
Answer: C
Q3) In the long run,the number of firms in an industry may change.If the number of firms increases,then
A)the supply curve will shift outward to the right.
B)the demand curve will shift outward to the right.
C)the supply curve will shift inward to the left.
D)the demand curve will shift inward to the left.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 3: Extensions of Demand and Supply Analysis
Available Study Resources on Quizplus for this Chatper
399 Verified Questions
399 Flashcards
Source URL: https://quizplus.com/quiz/78796
Sample Questions
Q1) Suppose that consumer income decreases and that hamburger is an inferior good.Which of the following will occur in the market for hamburger?
A)Market clearing price will rise,and equilibrium quantity will rise.
B)Market clearing price will fall,and equilibrium quantity will fall.
C)Market clearing price will rise,and equilibrium quantity will fall.
D)Market clearing price will fall,and equilibrium quantity will rise.
Q2) Who bears the costs of a program to control rents at a maximum level?
A)Landlords or owners of housing units
B)Consumers who face difficulty moving to a more suitable apartment
C)Homeless who cannot find rental units
D)All of these
Q3) If the government created a surplus of an agricultural product due to price supports,how might they dispose of this surplus?
A)give it away to a foreign country
B)purchase it and store it away
C)have the farmer destroy the crop
D)Any of these answers might be a successful tool in disposing of agricultural surpluses.
Q4) Who gains and who loses from rent controls?
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 4: Public Spending and Public Choice
Available Study Resources on Quizplus for this Chatper
346 Verified Questions
346 Flashcards
Source URL: https://quizplus.com/quiz/78795
Sample Questions
Q1) To an economist,a free rider is a person who
A)uses private goods without paying for them.
B)benefits from consuming public goods without paying for them.
C)consumes demerit goods.
D)uses the public transportation system without paying for it.
Q2) Public education is priced below market price largely as a result of
A)government subsidy programs.
B)under-funded public education.
C)rising test scores by students.
D)taxpayers who contribute little to the funding of public education.
Q3) Explain why an external benefit leads to an under-allocation of resources to the production of a good.
Q4) An effluent fee is an example of
A)a government policy to correct for an external benefit.
B)a government policy to promote the production of a product with an external cost.
C)a government policy to promote the production of a product with an external benefit.
D)a government policy to correct for an external cost.
Q5) How does a government-sponsored good differ from a public good?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 5: Funding the Public Sector
Available Study Resources on Quizplus for this Chatper
202 Verified Questions
202 Flashcards
Source URL: https://quizplus.com/quiz/78794
Sample Questions
Q1) Social Security taxes are regressive because
A)they apply only to rich people.
B)they are not applied to income beyond a certain amount.
C)they are applied to welfare recipients.
D)they are applied to retired people only.
Q2) Using the above figure,if the government levies a new unit tax in this market,S represents the original supply curve,and St represents the after-tax supply curve,then the after-tax price paid by consumers is the vertical distance from the origin to A)point A.
B)point B.
C)somewhere between point B and point A.
D)point F.
Q3) State sales taxes are operated as a system of A)ad valorem taxation.
B)unit taxation.
C)income taxation.
D)revenue minimizing taxation.
Q4) What is a government's budget constraint in the long run as opposed to a given time period?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 6: Demand and Supply Elasticity
Available Study Resources on Quizplus for this Chatper
413 Verified Questions
413 Flashcards
Source URL: https://quizplus.com/quiz/78813
Sample Questions
Q1) For most items,we find the price elasticity of supply will be A)negative.
B)positive.
C)invisible.
D)inverse.
Q2) If the price of gasoline increased by 5 % and consumers responded by purchasing 1 % less gasoline,the absolute value of price elasticity of demand for gasoline would equal A)0.1.
B)0.5.
C)1.5.
D)0.2.
Q3) A perfectly elastic supply curve is
A)an upward sloping straight line that intersects the origin. B)horizontal.
C)vertical.
D)downward sloping.
Q4) "The slope of the demand curve gives the elasticity of demand." Do you agree or disagree? Why?
Q5) Which has a more elastic demand: hamburger or beef?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 7: Consumer Choice
Available Study Resources on Quizplus for this Chatper
458 Verified Questions
458 Flashcards
Source URL: https://quizplus.com/quiz/78811
Sample Questions
Q1) A consumer will achieve the highest level of utility possible when she consumes A)at the point at which the highest indifference curve is tangent to the budget constraint.
B)at the point at which the indifference curve crosses the budget constraint.
C)at a point to the left of the budget constraint.
D)just below the point where the indifference curve crosses the budget constraint.
Q2) The price of a hamburger is $1,and the price of a movie is $6.The consumer has purchased 2 hamburgers and 2 movies,and her marginal utility from the second hamburger is 20 and from the second movie is 120.The consumer has an income of $21.This combination of goods
A)maximizes utility and is an optimum because the marginal utility of the last dollar spent on each good is the same.
B)maximizes utility because the marginal utility of the last dollar spent on each good is the same,but it is not an equilibrium because marginal utility is not zero.
C)is not an optimum because the consumer has not spent all of her money.
D)is not an optimum because the marginal utility of the last dollar spent on each good is not the same.
To view all questions and flashcards with answers, click on the resource link above.
10
Chapter 8: Rents, profits, and the Financial Environment of Business
Available Study Resources on Quizplus for this Chatper
445 Verified Questions
445 Flashcards
Source URL: https://quizplus.com/quiz/78810
Sample Questions
Q1) When economic profits are positive,accounting profits
A)must be positive.
B)will be negative.
C)will equal zero.
D)could be positive,negative or zero.
Q2) If the death of an owner causes the firm to dissolve,the firm must have been
A)a partnership only.
B)a proprietorship only.
C)a corporation only.
D)either a proprietorship or a partnership.
Q3) The higher are a firm's risk-corrected returns,
A)the lower are its labor costs.
B)the higher are its opportunity costs.
C)the more advantage it has in obtaining investor financing.
D)the more difficulty it will have financing its expansion plans.
Q4) Corporations account for
A)the largest proportion of business revenues generated in the United States.
B)the largest amount of taxes paid to the U.S.government.
C)the largest number of firms in the United States.
D)the smallest amount of revenues in the United States.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 9: The Firm: Cost and Output Determination
Available Study Resources on Quizplus for this Chatper
387 Verified Questions
387 Flashcards
Source URL: https://quizplus.com/quiz/78809
Sample Questions
Q1) Suppose that one worker can produce 15 cookies,two workers can produce 35 cookies together,and three workers can produce 65 cookies together.What is the marginal product of the 3rd worker?
A)21.67 cookies
B)65 cookies
C)30 cookies
D)35 cookies
Q2) As a firm increases the level of output that it produces,short-run average fixed cost A)rises and then falls.
B)remains constant since fixed costs are constant.
C)decreases.
D)decreases up to a particular level of output and then increases.
Q3) At the output rate at which diminishing marginal product begins,a firm will experience
A)constant average total costs.
B)increasing average fixed costs.
C)increasing marginal costs.
D)decreasing average variable costs.
Q4) What is a production function?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 10: Perfect Competition
Available Study Resources on Quizplus for this Chatper
431 Verified Questions
431 Flashcards
Source URL: https://quizplus.com/quiz/78808
Sample Questions
Q1) In the above figure,the firm will shut down if price falls below A)F.
B)I.
C)H.
D)E.
Q2) In the long run when a perfectly competitive firm experiences negative economic profits,
A)firms exit the industry,the market supply curve shifts rightward,and the market price falls.
B)firms enter the industry,the market supply curve shifts rightward,and the market price falls.
C)firms exit the industry,the market supply curve shifts leftward,and the market price rises.
D)firms enter the industry,the market supply curve shifts rightward,and the market price rises.
Q3) The goal of the perfectly competitive firm is to A)maximize total revenue.
B)maximize total profits.
C)minimize AFC.
D)minimize ATC.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 11: Monopoly
Available Study Resources on Quizplus for this Chatper
386 Verified Questions
386 Flashcards
Source URL: https://quizplus.com/quiz/78807
Sample Questions
Q1) What is a monopolist,and what is required for a monopolist to earn profits in the long run?
Q2) When comparing perfect competition and monopoly,a major assumption made is that
A)the monopolist faces a downward sloping demand curve.
B)consumers only care about the price of the good and not whether the seller is a monopoly or not.
C)the costs of production are the same under monopoly as under perfect competition.
D)the monopolist can make an above normal rate of return.
Q3) For a profit-maximizing monopolist,
A)P > MC.
B)P = MC.
C)P = MR.
D)P = ATC.
Q4) A major difference between a monopolist and a perfectly competitive firm is that A)the monopolist is certain to earn economic profits.
B)the monopolist's marginal revenue curve lies below its demand curve.
C)the monopolist engages in marginal cost pricing.
D)the monopolist charges the highest possible price that he can.
Q5) In principle,can a monopolist hold its monopoly power in the long run? Explain.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Monopolistic Competition
Available Study Resources on Quizplus for this Chatper
309 Verified Questions
309 Flashcards
Source URL: https://quizplus.com/quiz/78806
Sample Questions
Q1) In which industry structure is advertising and sales promotion likely to be most important?
A)Perfect competition
B)Monopoly
C)Monopolistic competition
D)All of the above are equally reliant on effective advertising and promotion
Q2) A firm in a monopolistically competitive market determines the profit-maximizing output at which
A)MR = P.
B)MR = ATC.
C)MR = AVC.
D)MR = MC.
Q3) A monopolistic competitor is like a competitive firm in the long run,because
A)it earns positive economic profits.
B)it earns zero economic profits
C)both firms will earn positive economic profits.
D)both firms will increase price to increase profits.
Q4) Is monopolistic competition efficient? Explain.What is Edward Chamberlin's view about the efficiency of monopolistic competition?
Q5) How does an information product differ from a product such as a desk?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 13: Oligopoly and Strategic Behavior
Available Study Resources on Quizplus for this Chatper
307 Verified Questions
307 Flashcards
Source URL: https://quizplus.com/quiz/78805
Sample Questions
Q1) A member in a cartel can earn more profits by
A)charging a slightly lower price and raising production.
B)producing less than the agreed rate.
C)selling less than the agreed amount.
D)none of the above.
Q2) If the United States' largest bakery buys an agricultural firm that specializes in growing wheat,we would have an example of
A)a horizontal merger.
B)a vertical merger.
C)a monopoly.
D)excessive product differentiation.
Q3) Oligopolistic industries are characterized by a
A)few large firms and no barriers to entry.
B)large number of firms and no barriers to entry.
C)few large firms and substantial barriers to entry.
D)large number of firms and substantial barriers to entry.
Q4) How does the presence of network effects in a two-sided market affects the pricing behavior in the market?
Q5) Why would a member of a cartel cheat?
Q6) How can network effects lead an industry to become an oligopoly?
Page 16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Regulation and Antitrust Policy in a Globalized Economy
Available Study Resources on Quizplus for this Chatper
309 Verified Questions
309 Flashcards
Source URL: https://quizplus.com/quiz/78804
Sample Questions
Q1) All of the following are exempt from antitrust laws EXCEPT
A)labor unions.
B)professional baseball.
C)oil companies.
D)public utilities.
Q2) The U.S.antitrust enforcers will likely block a merger if
A)the merging firms already earn excessive profits.
B)the merging firms are in different markets.
C)the merger will substantially increase market power.
D)the degree of concentration declines as a result of the merger.
Q3) If a regulator forced a natural monopolist to set P = MC,
A)the monopolist would earn economic profits.
B)the monopolist would suffer economic losses.
C)the monopolist would break even.
D)the monopolist would earn monopolistic profits.
Q4) Offering two or more products for sale as a set is known as A)bundling.
B)versioning.
C)monopolizing.
D)product sharing.
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 15: The Labor Market: Demand, supply and Outsourcing
Available Study Resources on Quizplus for this Chatper
376 Verified Questions
376 Flashcards
Source URL: https://quizplus.com/quiz/78803
Sample Questions
Q1) Absent government interference,the wage rate for labor in a competitive market is established
A)solely by the firm's demand for labor.
B)solely by the market supply of labor.
C)by both the demand for and supply of labor at each individual firm.
D)by the the market supply and market demand for labor.
Q2) Refer to the above table.For each level of employment of labor shown
A)marginal product declines.
B)marginal product holds constant.
C)marginal product rises.
D)marginal product falls for all employees beyond the 10th unit of labor.
Q3) A monopolist hires fewer workers than a perfectly competitive industry,other things being equal,because
A)a monopolist has to pay higher wages in order to attract additional workers.
B)the monopolist substitutes more capital for labor when compared to a competitive industry.
C)the monopolist producer has to deal with unions and face higher wages than do competitive industries.
D)the monopolist produces less output than a competitive industry.
Q4) What does it mean for a firm to be a price taker in the labor market?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 16: Unions and Labor Market Monopoly Power
Available Study Resources on Quizplus for this Chatper
318 Verified Questions
318 Flashcards
Source URL: https://quizplus.com/quiz/78802
Sample Questions
Q1) In a monopsonistic market,
A)employment is lower but wages are higher than in a comparable competitive market.
B)employment is higher but wages are lower than in a comparable competitive market.
C)both employment and wages are higher than in a comparable competitive market.
D)both employment and wages are lower than in a comparable competitive market.
Q2) Which is NOT one of the potential benefits of labor unions?
A)Unionism raises social efficiency.
B)Unions appear to reduce wage inequality.
C)Unions may reduce a company's profits.
D)Unions may have contributed to safer working conditions.
Q3) The impact of a strike is limited to the ability of the union to
A)prevent replacement workers from continuing their work.
B)lower its wage demands of non-union members.
C)control the pension fund.
D)none of the above.
Q4) What is a monopsony and how does a monopsonistic firm determine the wage rate to pay its employees?
Q5) Can unions increase productivity? Explain.
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 17: Income, poverty, and Health Care
Available Study Resources on Quizplus for this Chatper
302 Verified Questions
302 Flashcards
Source URL: https://quizplus.com/quiz/78800
Sample Questions
Q1) Refer to the above figure.Which curve shows the second most unequal distribution of income?
A)A
B)B
C)C
D)D
Q2) Most individual's income peaks when they are about A)30.
B)40.
C)50. D)60.
Q3) Use the information in the above table.If Income was evenly distributed,each person would receive
A)$9,000.
B)$2,500.
C)$1,800.
D)$1,000.
Q4) Some economists argue that the official poverty figures overstate poverty in this country.Why?
Q5) How is moral hazard related to health care?
Page 20
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Environmental Economics
Available Study Resources on Quizplus for this Chatper
300 Verified Questions
300 Flashcards
Source URL: https://quizplus.com/quiz/78799
Sample Questions
Q1) Costs borne solely by the individuals who incur them are
A)private costs.
B)social costs.
C)internality.
D)common property.
Q2) When a person can pass some of her costs of using a resource on to someone else,
A)the use of the resource is not affected by her actions.
B)the internal costs of using the resource exceed the private costs.
C)she uses too much of the resource.
D)she uses too little of the resource.
Q3) Suppose people value clean air more as their incomes increase.What would happen to the optimal amount of clean air as a country develops economically? Is there an economic prediction we can make from this?
Q4) Explain why the buffalo almost became extinct while cattle did not,even though both provide similar goods for people.
Q5) Explain how the optimal quantity of air pollution is determined.
Q6) Using a graph,show the effects of a negative externality.Where is the socially optimum point of output? How can it be achieved?
Q7) What are social costs? How do they differ from private costs?
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 19: Comparative Advantage and the Open Economy
Available Study Resources on Quizplus for this Chatper
314 Verified Questions
314 Flashcards
Source URL: https://quizplus.com/quiz/78798
Sample Questions
Q1) A voluntary import expansion involves a
A)country agreeing to import more from another country.
B)country agreeing to reduce its trade barriers.
C)country agreeing to an import quota.
D)firm agreeing to expand output.
Q2) International trade is based on the existence of A)absolute advantage.
B)perfect advantage.
C)productivity advantage.
D)comparative advantage.
Q3) Why is trade based on comparative advantage?
Q4) The selling of a good or service abroad at a price below what is charged in the home market or below the cost of production is referred to as A)recycling.
B)a quota.
C)dumping.
D)a tariff.
Q5) What are the effects of a tariff on a good?
Page 22
Q6) "Everybody has a comparative advantage in something." Do you agree or disagree? Why?
To view all questions and flashcards with answers, click on the resource link above.
Page 23
Chapter 20: Exchange Rates and the Balance of Payments
Available Study Resources on Quizplus for this Chatper
300 Verified Questions
300 Flashcards
Source URL: https://quizplus.com/quiz/78797
Sample Questions
Q1) Which of the following is included in both the balance of trade and the balance of payments?
A)exports
B)earnings on domestic assets owned by foreign residents
C)international capital movements
D)earnings by domestic residents on assets located abroad
Q2) When there is a negative entry for unilateral transfers in the balance of payments,it means that
A)there must be an offsetting positive sign in the capital account.
B)U.S.residents gave more to foreign residents than foreign residents gave to U.S.residents.
C)U.S.residents purchased less services from foreign countries than foreign countries purchased from U.S.residents.
D)U.S.residents purchased more services from foreign countries than foreign countries purchased from U.S.residents.
Q3) Suppose there was a substantial increase in political instability in the rest of the world.What would be the effects on the U.S.current account? Explain.
Q4) Explain the three categories of balance of payments transactions.
To view all questions and flashcards with answers, click on the resource link above. Page 24